Laporte, Britain's second-largest chemicals company, yesterday confirmed the City's worst expectations following last December's profits warning. After an pounds 88.7m exceptional charge to cover the cost of a wide-ranging strategic review, earnings per share collapsed more than 90 per cent.
The new chief executive, Jim Leng, said: "It goes without saying that 1995 was a challenging year for Laporte and disappointing, particularly in the second half."
Mr Leng, whose arrival from the Dundee-based packaging group Low & Bonar last autumn was greeted with a fanfare of high expectation, shocked investors just weeks after his arrival by warning that profits for the year would be below 1994's result. The market had expected an improved out-turn.
As foreshadowed, pre-tax profits emerged at pounds 113.2m before the exceptional charge, down 8 per cent from 1994's pounds 123.5m. The fall occurred despite an 11 per cent jump in sales to pounds 1.08bn, underlying the squeeze in margins afflicting the second half of the year.
Mr Leng confirmed the group's restructuring, which within weeks of his arrival had seen the departure of its former chief executive and finance director. "A detailed strategic review has been concluded which confirms our confidence in the future. A vigorous action plan to rationalise and refocus the group and to reduce costs is now well under way" he said.
Nine of the company's 100 sites or offices will be closed as a result of the rationalisation, with about 300 employees losing their jobs. Full benefits of the restructuring are not expected before next year.
Like many of its peers, Laporte was hit in 1995 by violent swings in the price of its raw materials.
The confirmation of last year's warning closes a difficult period for Laporte, which saw its reputation dented by the unexpected trading statement. Its shares fell 189p on the day of the announcement to a low for 1995 of 613p, although they have since recovered to 683p, down 7p yesterday.
Before the exceptional charge, earnings per share fell 10 per cent to 41.5p from 46.1p, while including it the decline was a more dramatic 91 per cent to 4.3p. Despite the fall, Laporte is recommending an unchanged final dividend of 14.5p, to make a total for the year of 23p, up 2.7 per cent.